Restaurant Case Study with Agnes- Business Killer 4: Non-traditional Competitors Cont’d –
Posted by Ryan Volberg at October 30, 2007 2:45 PM
Phase 1 – The Menu
Now she could implement the first stage of her overhaul. Early last year, Agnes had invested in a restaurant point-of-sale system. She ran the sales mix report and looked at the results. It highlighted the top selling items in each category. Using a technique called menu engineering; she began to analyze the items in terms of margin and volume of items sold. Her results were broken down into four basic categories.
|
|
Low Margin
|
High Margin
|
|
.
|
|
|
|
High number of items sold
|
Plow horses: These items sell a high number of products, but are lower in margin that what Agnes would like to see.
Agnes needs to increase the price on some of these items. For others, she needs to create add-ons that can improve her margin.
|
Stars: These are Agnes’ signature items. They’re the ones that her customers love! Agnes makes a note of these items so that she can leverage them in her marketing later.
|
|
.
|
|
|
|
Low number of items sold
|
Dogs: Unless there’s a compelling reason to keep them, Agnes will drop these items from her menu
|
Puzzles: If these items would sell more, they’d be stars. Agnes makes a separate list of these items. They’ll be the target of some extensive testing.
|
Armed with her results, she made a note of all of the add-ons that she could add to her plow horses. She created “Add Chicken” and “Add Shrimp” option for most of the items. Some of the items had “Add Bacon” and “Add Cheese” options added. Without making any changes to the printed menu, she had a brief meeting with her staff.
“I’ll be giving a $100 gift certificate redeemable at the mall down the street to the person that sells the most add-on items tonight,” she proclaimed to the staff. While the amount seemed a little steep, Agnes had a shrewd plan. “After tonight, I’ll secretly pick one night each week to give away another $100 for the next four weeks.” She needed to engrain the need to sell more to each customer and set the habit with all of her servers.
That night, Agnes’ servers sold $62.00 in add-ons. While this didn’t cover the cost of the gift certificate, it set the tone for the contest. When she looked back at last week’s sales, she found that the servers only sold $13.00. If these results held, then her investment would yield a 200% return on her investment over the next month.
Next week, Agnes will complete her menu makeover.
Ryan Volberg is the CEO of Vivonet, a company dedicated to ensuring retail and restaurant success.
 Category: Survival Tips Story of Agnes the Restaurateur
Comments
|
